Bookkeeping for Independent Contractors: The Essential Guide

Join over 1 million businesses scanning receipts, creating expense reports, and reclaiming multiple hours every week—with Shoeboxed. Join over 1 million businesses scanning & organizing receipts, creating expense reports, and more—with Shoeboxed. A CPA can review your year-end balance sheet, statement of cash flow, income statement, and other financial records, giving you valuable guidance on what to do going forward. Since independent contractors are not employees and don’t receive employee benefits, they must take the initiative to get health insurance, plan for retirement, and pay their taxes, including payroll taxes. It sets clear expectations, highlights responsibilities, and minimizes the potential for misunderstandings.

Staying on Top of Your Bookkeeping

Additionally, independent contractors are responsible for their tax payments, including unemployment taxes, unlike employees who have their employer withhold taxes from their wages. It’s essential to review your bookkeeping contract agreement periodically, at least annually, so it reflects your current services and accountant for independent contractor pricing structure. The Client will be responsible for providing all the necessary documentation and accounting system access necessary to perform the services outlined in the bookkeeping agreement above. Remember that templates are a great place to start, but every bookkeeping services agreement should be unique.

Turn business receipts into data & deductibles

Outline the process for resolving any disagreements that may arise during the agreement. Having a clear process in place helps minimize disruptions and allows for a more amicable resolution of any conflicts. Be sure to specify the frequency of services and any potential softwares leveraged to keep expectations clear. Leaving the scope of services ambiguous can lead to misunderstandings and potential disputes in the future. If you and your team struggle to keep track of multiple promised delivery dates, it’s time to implement a workflow management tool.

Fees and Payment Terms

This information is critical for managing cash flow and preparing tax returns. A bookkeeping services agreement template should clearly explain what service is being provided and what the payment is. This agreement ensures the books are balanced, checks that the accounting system is correct, and creates financial records. As an independent contractor, it is important to accurately and consistently track your financial transactions. Proper bookkeeping can help you stay organized, make informed financial decisions, and prepare for tax season.

Service Rates

Shoeboxed is an expense & receipt tracking app that helps you get reimbursed quickly, maximize tax deductions, and reduce the hassle of doing accounting. This guide will define the role of an independent contractor, why monthly bookkeeping is so important for independent contractors, and how independent contractors handle their bookkeeping and tax liabilities. This clause helps manage expectations and protects both parties from unforeseen circumstances. It’s important to consult a legal professional to ensure you draft this clause appropriately.

• In some instances, the bookkeeper may demand the immediate payment of a retainer before any services are rendered.
• They typically maintain receipts, payments, sales records, purchase records, and other financial data and manage bill payments or payroll for a business.
• Keeping track of receipts and invoices is essential for accurate bookkeeping.
• This includes recording all clients’ income and any other taxable income sources.
• You should also include language explaining who is responsible for paying expenses incurred during the engagement, such as software fees, travel expenses, and other out-of-pocket expenses.
• The business expenses can offset some of the gross profit and reduce some of the tax liability.

See Jetpack Workflow In Action

• As such, the Accountant shall not share such information with any party without express written consent from the Client, unless otherwise required to do so by law.
• In addition, make the formatting consistent throughout the document with clear headings, bullet points, and proper spacing.
• This guide will define the role of an independent contractor, why monthly bookkeeping is so important for independent contractors, and how independent contractors handle their bookkeeping and tax liabilities.
• Receipts and documents become part of a searchable database so you can quickly find what you need when you need it.
• This clarity prevents any confusion about who is bound by the terms of the agreement.

The Client agrees to provide the Accountant with full access to all financial accounts and records. If you are an independent contractor or self-employed business owner and would like help with your bookkeeping, contact us today and schedule a free consultation with one of our expert advisors. You don’t have to hire a bookkeeper or accountant, but it is very beneficial when filing and paying your taxes. Filing late or incorrect amounts of taxes can result in penalties and fines. Accounting software helps you calculate your tax estimates and makes it easy to reconcile your bank transactions.

• If you and your team struggle to keep track of multiple promised delivery dates, it’s time to implement a workflow management tool.
• Having a formal contract in place with your accountant is crucial to outlining the scope of services and fees.
• They must track their business expenses to deduct them from their income on their tax return.
• To learn more about an independent contractor agreement for an accountant and bookkeeper, you can post your legal need on UpCounsel’s marketplace.
• Stating how legal disputes will be resolved (such as through arbitration) will be helpful if the engagement ever leads to legal action.

• Be sure to detail payment terms, including the due date for invoices, late payment fees (if applicable), and preferred payment methods (e.g., check, ACH transfer).
• That’s why we’ve created a free set of 32 accounting and bookkeeping workflow templates to help you standardize your workflows.
• Although a license is not officially required, bookkeeping certification can be obtained and is recommended for anyone pursuing a career in this area.
• This includes tracking clients’ payments and any deposits made into your business bank account.
• You will have options for services, payment terms, confidentiality, and the roles and responsibilities of both parties.
• You should include language explaining that it is the full responsibility of the client to provide banking records and other financial information necessary to complete the engagement.

Common Features of an Accounting Contract

Estimated taxes